Oil falls below $117 on slowing growth

Brent crude oil slipped below $117 per barrel on Tuesday, falling for a third session in a row on signs of lacklustre European growth and easing geopolitical tensions.

Oil prices rose strongly during the first six weeks of the year, but peaked more than a week ago and have since consolidated as investors have reassessed the prospects for global growth and potential worries over oil supply.

Forecasts for a slowdown in France's GDP growth in 2013 and elections in Italy have added to uncertainty on the euro zone outlook, curbing investors' appetite for riskier assets like oil.

Concerns of possible threats to Middle East and North African oil supply also appear to have receded, trimming a risk premium that at one point added $10 to $20 per barrel to prices.

Brent crude for April delivery was down 60 cents at $116.78 per barrel by 1430 GMT. U.S. crude for March fell 6 cents from Friday's close to $95.80.

There was no settlement for U.S. crude futures on Monday due to a holiday in the United States.

"The oil price currently appears to have reached a ceiling of $118 per barrel, which could prompt short-term-oriented market players to abandon their long positions," Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, said.

Brent speculators reduced their net long positions from a record high in the week to Feb. 12.

Brent is nearly $2 below a nine-month high of $119.17 hit earlier in February on a price run-up spurred by economic recoveries in the world's top two oil consumers, the United States and China, and higher demand forecasts from the U.S. Energy Information Administration and OPEC.

RISK PREMIUM "OVERBLOWN"

"With a significant geopolitical risk premium currently priced in, we feel that some downside is warranted, unless there is a significant escalation in Middle East North/Africa tensions," Standard Bank commodities analyst Marc Ground said.

Andrey Kryuchenkov of VTB Capital identified a risk premium of around $10 a barrel in the Brent price linked to Middle Eastern tensions over Iran's disputed nuclear programme.

Investors are keeping a close eye on nuclear talks between major powers and Iran next week. Sanctions on the OPEC producer have reduced its oil exports, which could have fallen below 1 million barrels per day (bpd) in January, according to estimates from the International Energy Agency (IEA).

"The political risk premium is overblown, so Brent won't get any higher unless something happens in the Middle East. People will probably take profits this week," Kryuchenkov said.

Volumes were thin in early trade on Tuesday but could pick up later as U.S.-based traders place bets ahead of the release of two sets of U.S. oil inventories data, delayed by a day to Wednesday and Thursday.

Housing data from the United States later this week could also provide signs on its economic health.

Technical charts point to lower prices in the absence of fresh data that could sway the market.

Brent oil is expected to fall into a range of $111.97 to$113.67 per barrel over the next four weeks, similar to a downtrend between March and June last year, Reuters markets analyst Wang Tao said. (Additional reporting by Emma Farge in London and Florence Tan in Singapore; editing by James Jukwey)